Insider Buyers At Lithium Ionic Sitting On CA$119k Profit

Insiders who bought Lithium Ionic Corp. (CVE:LTH) in the last 12 months may probably not pay attention to the stock's recent 10.0% drop. Even after accounting for the recent loss, the CA$787.6k worth of stock purchased by them is now worth CA$906.7k or in other words, their investment continues to give good returns.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Lithium Ionic

Lithium Ionic Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when CEO & Director Blake Hylands bought CA$105k worth of shares at a price of CA$0.90 per share. That means that even when the share price was higher than CA$0.90 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Lithium Ionic insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around CA$0.78. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does Lithium Ionic Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Lithium Ionic insiders own about CA$28m worth of shares. That equates to 19% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Lithium Ionic Tell Us?

It doesn't really mean much that no insider has traded Lithium Ionic shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Lithium Ionic and their transactions don't cause us concern. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that Lithium Ionic has 3 warning signs and it would be unwise to ignore these.

Of course Lithium Ionic may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.